NorthWest Healthcare Properties REIT has acquired The Dundas-Edward Centre, a 410,000 square foot two-tower office complex and eight-level parking facility located in downtown Toronto, for approximately $103 million (including mortgage prepayment costs and excluding closing costs). The purchase is expected to close in the first quarter of 2011 subject to customary closing conditions, and is expected to be immediately accretive.
Located in the Discovery District, one block from University Avenue, the complex is in close proximity to several hospitals including SickKids, Princess Margaret, Toronto General, and Mount Sinai. The complex is currently 97 per cent leased to primarily medical, professional and government tenancies including the following healthcare tenants: SickKids, Medisys Diagnostic Imaging, a pharmacy, labs, clinics and numerous specialist physicians and general practitioners.
The purchase price represents approximately a seven per cent capitalization rate applied to in-place annual net operating income or $251 per square foot of rentable area ($228 per square foot if the parking NOI is not included). The REIT will have the option to assume the existing first mortgage of approximately $25 million at a 5.125 per cent interest rate which matures September 1, 2014, and receive credit for the mortgage pre-payment costs which the vendor would otherwise incur. The equity portion of the REIT’s investment will be funded from existing resources.
This investment will be the REIT’s twelfth asset in the Greater Toronto Area and its twenty-first asset in the Province of Ontario. The REIT believes that the acquisition of The Dundas-Edward Centre will further solidify its market leadership in healthcare real estate and its position as “Canada’s Healthcare Landlord”.